Aurora Spine Corporation (ASG) Earnings Call Transcript & Summary

Good morning, and welcome to the Aurora Spine Second Quarter 2024 Financial Results Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Chad Clouse, Chief Financial Officer. Please go ahead.

Good morning, everyone, and thank you for joining us for Aurora Spine Corporation's quarterly earnings conference call. We look forward to discussing our performance for the second quarter of 2024. Before we dive into the details, I'd like to remind everyone that this call will contain forward-looking statements. These statements involve risks and uncertainties, and actual results could differ materially. For a full discussion of these risks and uncertainties, factors, you are encouraged to read Aurora Spine's documents on file with SEDAR+, including those set forth in periodic reports filed under the forward-looking statements and Risk Factors section. Statements made during the course of this call may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities Act of 1934. These statements reflect current expectations concerning future events and results. Words such as expect, intend, believe, may, will, should, could, anticipate and similar expressions are words that are used to identify forward-looking statements, but their absence does not mean that the statement is not forward-looking. These statements are not guarantees of future performance and are subject to risks and uncertainties and other important factors that could cause actual performance or achievements to materially differ from those projected. Aurora Spine does not intend to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. On the call, management may refer to EBITDAC, adjusted EBITDAC, adjusted net income and adjusted EPS, which are not measures of financial performance under generally accepted accounting principles or GAAP. Management believe that these non-GAAP figures in addition to other GAAP measures provide meaningful supplemental information regarding the company's operational performance. Investors should recognize that these non-GAAP figures may not be comparable to similarly titled measures of other companies. These measures should be considered in addition to and not as a substitute for superior or any measure of performance prepared in accordance with GAAP. A reconciliation of non-GAAP measures in the mostly directly comparable GAAP measures in accordance with SEC G or SEC Regulation G can be found in the company's earnings release. We're joined today by Trent Northcutt, our Chief Executive Officer; and myself, Chad Clouse, our Chief Financial Officer. We will present an overview of our financial performance followed by a Q&A session. I will now turn the call over to Mr. Trent Northcutt, President and Chief Executive Officer of Aurora Spine. Trent, please proceed.

Thank you, Chad. Good morning, everyone. I'm pleased to share our results for the second quarter of 2024, which is our pivotal period for Aurora. With notable progress in both our financial performance, the market penetration, our strategic focus on expanding the sales force and targeting underserved markets has yielded strong results as evidence of our significant sales of an improved profitability. On Wednesday, we issued a press release detailing our financial results for the second quarter of 2024. Hopefully, you've had a chance to review the news release, but if not, a copy can be found on our website at auroraspine.com, under the Investors section or other financial websites. I'd like to discuss some of the financial and operational highlights from the quarter. We reported revenue of $4.1 million marked the third consecutive quarter of over $4 million in sales, which represents a 14% increase compared to Q2 2023 and a 24% increase year-over-year. The quarter benefited from strong demand in the pain market sector, particularly for the SiLO TFX and the ZIP 51 implant, driven by targeted marketing, training and product innovation. Our net loss for the quarter was $0.15 million, significantly narrowing the net loss from $0.482 million in Q2 2023, to earnings per share of $0.00 in Q2 2024. Gross margins improved an impressive 62.4% in Q2 2024 in front of 56.9% in the same period last year. The margin improvement is a direct result from the increased sales of proprietary products and the higher profitability participating in markets with favorable pricing dynamics like ambulatory surgery centers. Operating expenses for Q2 2024 was $2.74 million, up from $2.51 million in Q2 2023. The rise in expenses was primarily due to the increased commission and travel associated with expanding our sales force, partially offset by reductions in research and development and professional fees. We generated $0.348 million in operating cash flow, reflecting a strong operational performance and effective working capital management -- from the management team. Notably, SiLO TFX grew by 20.4% from Q1 2024 to Q2 2024, reflecting the success of Aurora's expansion into the pain interventional market. The Zip 51 has doubled in 2024 compared to 2023. The robust growth was attributed to the intensified marketing efforts and increased adoption amongst surgeons. Aurora continues to scale its sales team throughout Q2, directly contributing to the sales surge. The additional new sales professionals is expected to further drive growth as they onboard more surgeons and more customers for Aurora's ecosystems. The company maintained its commitment to excellence by conducting advanced training sessions, cadaver labs for top orthopedic, neuro and pain interventional physician showing that the clinical advantages of the ZIP, the SiLO implants. I'll now hand the call over to Chad Clouse for further discussion of the financials.

Thank you, Trent. I'll take you through some additional financial details. Sales for the 6-month period of June -- ended June 2024 were $8.05 million, up from $6.48 million in the comparable period of 2023 with a net loss of $0.42 million. It is a significant increase from a net loss of $1.145 million in the comparable period of 2023. The decreased net loss is a combination of increased sales and cost controls while we continue to expand the sales force. EBITDAC, a non-GAAP figure and a non-IFRS figure, measures is defined as earnings before interest, tax, depreciation, amortization and stock-based compensation was $0.11 million compared to a loss of $0.16 million in Q2 of 2023. This marks the fourth consecutive quarter of positive EBITDAC. We ended the quarter with $0.52 million in cash and cash equivalents, up from $0.37 million at the end of Q1. This increase is due to strong operating cash flow and prudent capital management. The net loss of $0.15 million was offset by a reduction in accounts receivable, prepaid assets in the inventory with an increase in accounts payable. The company has increased collection efforts, which can be seen by the reduction of the trade accounts receivable by approximately $300,000. Inventory levels are being steady and the company has not had supplier delays in replenishing inventory. The company is currently manufacturing ZIP and TFX implants in our facility along with associated TFX instruments. The company invested $145,000 in instruments and trades in the current quarter. These instruments will support the increased sales of Aurora's implants. The increase in accounts payable is nominal and the product of the increased business. Our related [ prior ] loan was extended by another year and has a current balance of $2.6 million at the end of Q2. The company issued no shares during the quarter and recorded a $6,500 expense for stock-based compensation. Company issued 130,000 stock options and 1 million options expired in Q2 2024. I'll now turn the discussion back to Trent.

Thank you, Chad. To summarize, we are very pleased with our performance this quarter. Our strong results reflect the hard work of the team and our commitment to executing our strategy. We're optimistic about our growth prospects, and we're confident in our ability to deliver the value to our shareholders. Operator, we'll now take -- open the calls on the floor.

[Operator Instructions] Our first question is from Tom Fedichin with MicroCap Connection.

And nice to see that we had revenues close to $4 million or actually over $4 million, 2 quarters in a row. I believe that's a company record for you guys. So congratulations there. The company is moving in the right direction.

3 quarters in a row.

Wonderful, yes. No, there's definitely a trend here. So the year-over-year sales growth for TFX grew from $800,000 last year to $1.7 million this year. Can you speak to what's driving the sales increases. Is this from the -- just strictly the addition of new doctors from these new director of sales? Or is this just a continuation of doctors increasing the usage? So like what's the average use per doctor per month, for example, for the SiLO TFX? And where do you see this going as we move into the latter half of this year, given we've got so many new sales structures brought on?

Yes. So the -- directly to the SiLO allograft and also SiLO TFX. SiLO TFX has already shattered some records for the product. It continues to grow and expand. We can go into -- here into Q3. So we -- it definitely is tied to doctors getting trained. We actually have coverage now in that region, that location, in a city of that state, we've added more people who can get on a plane, or get in a car and drive and get those procedures covered, giving the doctor some support in the field which was really important to us. Also, the training continued. People sometimes even came back for a second training because time had lapsed. So we gave them our confidence that they were able to see -- that they could see the technique in that. They weren't -- say the first ones from last year now to this year because the revenues have really started to show strong TFX, unit counts are going way, way up. We're even internally looking to build some more inventory on that. The cost of those kits is very low. So it's an easy deliverable for us, but getting more implants sold is a top priority and getting more coverage is a top priority.

Okay. How many kits or how many units per doctor have you -- do you use that as a metric are being used per month per doctor? Are you able to hit 2 yet on average per doctor that's trained?

Well, I don't worry about it if it's -- if a doctor does 1 or if he does 10 in a month, there's just going to be those accounts that do -- some do less and some do more. Our goal is to sell as many units as possible. We first targeted how do we get to the first 25 in a month? How do we get the first 50, 75 and that brought over 100 implants a month. And now we're shooting for the goal of getting to the first 150 and then it will be up to 200 implants in a month and then consistently hit those marks. I'm not going to pull out a crystal ball and try to figure out if one doctor can do more or less in a month. There are certain doctors that are very consistent and we're going to keep finding those doctors that are the most consistent, but we're not going to shy away from anyone who wants to use this once or twice in a month.

Perfect. So just to be clear, so you've surpassed the 100 to the SiLO TFX unit implants per month. Has that been accomplished for 1 month? Or is this kind of like a newly hit target that's just been hit? That's -- it's news to me that you're saying this is why I asked.

Yes, it's a new trend for us. We're up and over the 100 mark. And we know that we'll still feel some ebb and flows, it will be higher, it will be lower, but we know that it's now -- it's trending every single month upwards.

And would you say that the average SiLO TFX is sold that's returning for $9,000 per unit?

No. What's our -- are we running the average on that now, Chad?

I think it's a little over $7,000.

And the other thing that comes -- just on that is that last year, the SiLO allograft was -- had gone -- second half of the year had dropped off significantly. It's now between 6% to 8% of our monthly number is in the allograft where the TFX is over 30% of the monthly number, but it's nice to see that the allograft number is back and adding on to revenues for the company.

No question. Now for newer investors who are new to the story, can you speak to the size of the market of the SI joint space? And I only say this because you're hitting new record numbers. And where do you see this going in another year or 2 with the SiLO TFX? Do you think you can maintain this growth rate and potentially double sales year-over-year in the SiLO TFX?

Well, I certainly think that the TFX can continue to grow. The market is based upon some of the SI bone market estimates out there in the ortho world and some other indicating companies that put that out on the SI joint market. It's a very high number. They estimate that there's over 279,000 procedures to be performed. Now that's a big number. I mean none of us are there yet. SI bone own 60% of the market from their own words. But that means that the 40% of the market is people like us that are in that marketplace starting to chip away at it and are moving our way up in units and customers. And our focus has been with ortho, neuro and the interventional market. And we do have -- still have a blend of that. So the market's been evaluated per SI bone as over a $1 billion market, estimate. So it's a very large opportunity for everyone involved in the SI Joint space.

Incredible. No, that's awesome. Now you brought on a number of new sales directors, how many new sales directors do you currently have? And how are sales from these numbers going?

We have sales directors, Florida, Texas, Nevada, Illinois, Oregon, California, Arizona, all around the country. So we got a total of 12 people selling in the field. We've added some additional like more than 1 person in Texas, such a big state. We've got what we call TMs, territory managers where they access as sales role, case coverage and also -- and going up to trying to get more sales in their area. But they don't travel as broad, like they don't -- they typically stay right around the area, like the lady we have in Utah, she'll go back and forth to the border of Nevada and Utah, but up and all around between Salt Lake in the lower part in Southern Utah and the southern part of Nevada. So she can make those trips in her car to get that covered where our regional sales directors, they could live in Oregon, but they're going all over to Washington, Idaho, down to Northern California, Northern Nevada and so forth. So they're traveling around on planes and trains and cars. And we've got more people in the queue to bring in, in areas that we need more coverage and we think that will have a big impact on sales because we actually have some sales in those areas, but don't. Our 2 VPs of the company, east and west. One was in Illinois. The other one was in Nevada. They're traveling all over the place, covering cases trying to identify those people to come up underneath as regional sales directors. Most notably that we added to the company just here at the end of Q2, we added a new VP of Spine [ Ron Eckels ]. He is now joining us. He comes back. He comes from a big company such as NuVasive and [indiscernible]. His sole focus is to really put an impact on our spine sales, and he's already hit the ground running. We've already started seeing results from him, which is directly going to be contributing to the Q3 numbers, driving much higher sales.

That's fantastic. So when it comes to bringing on a new member, it takes time to train them and of course, get them out in the field and have confidence to sell. What's the expected time frame from hiring to training to the point where you actually start to see sales show up on the earnings statement. Is it 3 to 4 months? Is that a good guesstimate?

Yes. It's starting to cut off a little bit of the 4-month period. But yes, it's between 2 and 3 full months that it takes them to get themselves in. A lot of it has to do with -- the training part, they picked up pretty quick. And usually, we identify people that are already -- they already know the industry, you think a lot about the technique for an SI or interlaminar fusion or the -- what's a lumbar fusion, what's the cervical fusion. They already know some of these things. It's getting to know our systems. And then the second part to that is getting out to their contact list and getting those appointments on the books and then meeting and having those contacts and then having that independent distributor, or that particular doctor in that region and working with them and then that hospital system. We want to make sure that we're already on the -- either the national contract or the regional contract or just that basically facility contract or that surgery center contract. And that sometimes adds some additional paperwork. So that process, just by itself, that's 30 days easily, right, when you're coming out the door. And then that second and third month is getting those -- then scheduled from the doctor on to our calendar, our surgical calendar. And that's usually the -- how it works.

Okay. And on a go-forward basis, after being fully trained, what's the anticipated annual revenues that you set as a goal for each sales director. Would it be $1 million, $1.5 million? What sort of -- what's the expected results you expect to see on a go-forward basis?

Well over $1 million. We -- obviously, we set everyone with a quota. And some people do as much as $300,000 in a month, and so that's much higher than, say, $1 million. We're not towards a $3 million territory. Some people were right around that $85,000, $90,000 a month area. So now they are that $1 million customer, but they're identifying more customers because they got the bandwidth to pick up more customers. But the first target, of course, is getting to that $1 million mark and then take it above from there.

Perfect. And so far, you're finding your new sales directors they're on the right path, like you don't see anyone that is slumping? Everything is going well there on that front?

Yes. Well, we had one that just didn't hit the numbers, so we had to let him go. We appreciated their efforts, didn't work for us with that particular location. We're already looking to replace that area with somebody who will even be better for the company, and we wish -- with the other person wish them well. Yes, we've got a lot of people on the list, all above the $1 million mark as a trend in the monthly trend. So we're really pleased. People are really working hard.

Awesome. Now switching gears a little bit. Can you speak about DEXA and how sales are going on this front? I do understand you brought on a new team member that's well versed in the space. How is it going for both him for you? And what can we expect moving forward?

DEXA still is my darling project, as you guys all know. It has spiked up this year. I still need more focus on it, Ron [ Eckels ], is putting a lot of focus on it. Part of the efforts on that is to get more distribution behind it, getting more people in front of it. We just didn't have the focus on it. A lot of our sales management was focused on SiLO, SiLO TFX and that's why those sales -- ZIP 51 doubled this year so far, right? So it's -- that's where the focus has been. And Ron's job now -- he joined us here in the second half of Q2. He's already [indiscernible]. I strongly believe that our Q1 sales will be beat in Q3. And the product now is heading to do -- it's on it's way to do $1 million this year and more. And that will then be a direct contribute to cervical sales and then lumbar sales will be based on ortho and neurosurgeons using our newer devices. We also incorporated -- it wasn't in a press release, it was more of a marketing release. We've added more lumbar products. It's called Osteonics. I put some posts out on it and so does the team -- marketing team. This is going to start to show up here in Q3 and Q4 numbers as an add-on product in line with our Hydra System, so with Hydra and Osteonics and DEXA and Apollo, all that's going to really snowball into, I think, improved and robust spine sales, spine specifics, spine surgeon sales only, all focused on outpatient approaches. So it stays in line with our philosophy of getting this more of an outpatient setting. But also some bigger construct procedures, people that maybe have scoliosis deformity and some other traumatic injuries to spine. And this will also help embrace us with the spine in the ortho neurosurgeon, keeping all of us together and focused on training of the interventional doctors in collaboration with the ortho and the neuro and all of our training programs often have ortho and neuro at these training with the interventional doctors. So it's adding that continuity that we've always wanted, and I think we've done a good job of being thoughtful about the marketplace and being good stewards in the space.

Perfect. Well, and you hit on a couple of topics here. You mentioned lumbar. The DEXA-L, the DEXA lumbar, when do we expect to see that? Is that going to be rolled out in the second half? Or is that going to be a 2025 rollout?

It's been in the hands -- it's been with the FDA for the approval of the device. We wanted to see more [indiscernible] that come out, we're close -- we're close. That's all I can say. It's right there, but I don't have a crystal ball with the FDA.

Okay. And the second one was the hydra screws. You mentioned on our last call, we could see sales up to $100,000 a month, I believe it was. How is the hydra screw selling, the sales of them?

Hydra sales are not an earner yet. But with Osteonics which is another screw, we are past -- screw sales are over $300,000 a month in sales as a total, and it's going to increase from there. So second half of this year, we'll see, it could double.

Wonderful. No, that's great. Now on to ZIP, what you did just cover. The sales continue to impress. What are your expectations moving forward? Do you see Aurora doing $1 million per quarter, as you bring on more doctors, clinics, et cetera? Is that -- was that attainable in 2024? Or do you think 2025 for that?

I'm still bullish on getting to the first $5 million quarter. That's what our goal is right now is, obviously, we wanted to get past -- maintain and have a sturdy floor beneath us, which is that $4 million-plus club. But for us hitting the $5 million a month is something that we're absolutely set after to get to this year. That way, we can really, really show everyone that we're way up and over $20 million run rate company and over $20 million average in this company. And we're on that doorstep right now, especially going into the second half of the year. Last year, that the advance of the coding reimbursement in the SI Joint market were a big deal. And that's -- when I say market, it's ortho, neuro, interventional, it's everyone. That coding reimbursement seems to be settling and it has settled a bit. There's still some things that are still rumbling around in the reimbursement markets of SI fusion. There's been some things that have been talked about that would make it an even bigger market. And we'll have to see how that plays out. Right now, we're getting great results from the SiLO TFX. We're getting great -- still continuously getting great results from the SiLO allograft system. And we get -- we have more and more interventional doctors that are revising old legacy nonfusion interspinous devices and replacing it with our intra lamina fusion devices ZIP with ZIP 51. We are the gold standard in our opinion and L5-S1, the lowest part of your spine with the SiLO -- sorry, with the ZIP 51, the implant we see this constantly growing. So we doubled sales on that. And I talked about that last year, how it's going to put ZIP 51. So for those involved others, that's something that could earmark on their schedule that says that, well, CEO said they're going to do something to support sales of that product, and we doubled it. So if we continue these trends -- yes.

Would you say that the ZIP 51 sales, you could do $1 million in a quarter? Like I know you're trending, I think you're at 6 was, I don't know, 6, 7 or whatever the number was, I can't remember. But in the latest quarter, do you feel you could do $1 million in a quarter from the ZIP products alone? Has that -- I only say that because it seems to be trending. You've doubled your sales year-over-year. And to double that again, you'd be at $1.3 million approximately. So is that sustainable business...

ZIP sales are already over -- in Q1, ZIP sales were $1.6 million.

Referring to ZIP 51, sorry.

ZIP 51, sorry. Yes, ZIP 51 -- well, is it -- no, it won't, but it was close. I mean in Q2 here, ZIP 51 sales were $669,000 in sales and ZIP LP was $820,000.

Yes, those are good numbers. And I guess from a standpoint of the company breaking out, you've had 3 quarters in a row around $4 million. When -- do you feel that Q3 is going to be the month that you actually get a major breakout and you bust through and yes, maybe you get closer to $4.5 million to $5 million? Is that what you guys are targeting, especially now the -- and will you be net earnings positive? I think every investor, they look at EBITDAC. And unfortunately, it just doesn't move the market. Net positive income is something that will move the market. So I guess, will you be net positive earnings or show net positive earnings Q3, Q4. And I think the important question to ask is, do you have the capital, enough cash on hand to be able to see you through the tremendous growth that you're experiencing?

Yes, we focus deeply around making sure that we were running more as an -- operational wise, we were focused on controlling the costs. Obviously, sales people and head count can be expensive. But that's really that can -- the cost part of the...

Let me jump in here. Tom, we're really close as you can see. I mean we've lost $1 million less this year through 6 months than we did last year. It's right on the cut, right? We've controlled our costs. If we get an increase in sales, we can probably see net positive income.

Yes. I say this because I know you're close, and I know you got more expenses with additional sales directors, et cetera. So -- and I know the market today, if you look at any way [ MicroCap ] they're being rewarded for showing positive net income, and that's the reason why I asked this because I know others are listening in on this call. And they want to hear kind of from the horse's mouth that profitability is something that management is very keen on, and that's -- is important that is. And that's the reason why I asked.

The Board wants to be profitable, and they've said it over and over again, and we've continued this year to control our cost while -- even while adding people to the sales force to increase their sales. And it's paying off, $1 million less in loss this year so far. And it takes -- if we get 2 big quarters coming up, net positive income is a possibility, yes.

Okay. And you have enough cash on hand to reach profitability, no need to raise any additional capital?

I don't think we need to raise any additional capital. So I'll update you a little bit on what we've done recently is I actually hired a support person who just collect money for the company. His whole job is to collect money. And as you can see, our cash balance is up through from Q1 to Q2. And I think our cash balance will be up again through Q3. So he's doing a very good job of collecting, collecting from older stuff, maybe he send me some details this morning. It's just our DSO is down 20 days, I think it was 20 days from quarter-to-quarter. So we're collecting. We have cash in the bank. I don't think we're going to be raising money.

There's no plan that we're not talking to you on about raising money.

Good. And maybe you can dig into the accounts receivables since we're on the topic. I know you did have some older receivables. You've mentioned this in previous calls that you have been collecting. Of the receivables that you have, it appears as though most of those receivables are newer now. Can you elaborate on kind of like what your receivables look like? What the percentage of your receivables are, say, beyond 90 days, and what are being paid? And what do you expected payout is from a new client that you bring on, whether it'd be doctor clinic or so forth, you're expected to get paid in 90 days, but what's the average payment for most of these clients that you bring in?

Most -- so we sell our build in net 30, some ask for next 60 or something like that. Our day sales outstanding is, I think, 88 days right now. But the majority of the customers pay in 30 to 60 over range. So they'll pay us within 60 days in surgery normally.

Perfect. Okay. And the older accounts receivables percentage-wise, of the total sum, is it a small proportion now? I know a year ago, it was quite a bit larger, but maybe you can elaborate on that.

It's gone down significantly even after the close of Q2. It's gone down even more significantly. So I mean I don't have the specific numbers in front of me, but it's been a significant reduction in everything over 90 -- the 60 to 90 is way down because we're collecting -- things aren't rolling from the 30-60 into the 60-90 anymore because we're collecting. Yes, we're in a lot better place with our receivables right now.

Perfect. Perfect. No, I appreciate that. Back on to the business. The previous call, you had mentioned about doing -- performing surgeries through Veteran Affairs or selling into Veteran Affairs, how has that gone? Has further training occurred? Have you witnessed any sales during the quarter? Do you expect to see more sales as we go throughout the balance of the year?

I kind of ask a question to get and I kind of missed -- it skipped on my end, on my ear piece here. So ask again, sorry.

Sure, no problem. I was asking about Veteran Affairs, how sales were going if you're still training with Veteran Affairs and what we can expect for the balance of the year through Veteran Affairs?

Yes. We are. We've actually got our first -- we've got a bulk purchase from Navy Balboa, so San Diego. They put in their first order for multiple units. They have to get through those units. But yes, we've already got -- they're looking for -- they went forward with the approval, bought a few implants, and now they're getting those patients scheduled on the books. And then they've already said as you put in one implant that they would then want to replenish and replenish. So this -- we've gotten started there. And yes, there's more VA facilities that we're close to getting approval in and maybe Balboa is a big military hospital and some other military facilities in the country. We've done some surgeries not a lot, but it's a process there. They move much slower. But once they get started, they're really great accounts and we're optimistic about it. But it's hard for us to measure right now. We don't have a forecast built into it yet. We're just still trying to work through the process on it. It's contributing some decent numbers to the company.

Okay. And 2 more for me and then I'll open up to other members and whatnot. But is there anything that maybe that you didn't mention that, say, for example, that you want to implement with the company at or change as we move forward, that whether that be new staff members that you still want to bring on? Or is there anything of significance that we can expect as we move into the second half of the year from a staffing perspective and that can open doors?

I think with Ron and the more regional sales directors that are out there, new distribution channels are going to be opened. So it's going to expand us into some new areas that were not in currently. And we're able to actually pick up a couple of some new distributors, some of you may have read in the market, [ Askey ] Labs, which was a European company is pulling out of the United States and sold off one of their major products, which was their disc replacement product. They sold it off to another spine company here in the U.S., so they're going to cease operations in September. And we've already been in contact with those existing distributors that are here in the U.S. to take a closer look at Aurora's products, and we see that as an opportunity that could come our way. A couple of new distributors were not telling us and they were selling [ Askey ] Lab now would look to sell our devices. And so there's some chance that are opening. And also, the consistency weekly sales in spine, it's a big focus of mine personally and that also and Ron echoes is here in the Q3 and with Osteonics and with Hydra and with DEXA that's going to be one of our big goals is to get those orthopedic, those neurosurgeons to utilize these products for us. And I think you'll see a big jump and a spike in that category in the second half of the year.

Perfect. And last but not least, I think the one commonality I've heard from shareholders is I'd love to see whether it'd be at investor conferences or whether they would see you even just get an interviewed on a more regular basis. I know at the moment, you don't have an IR team in place, maybe bringing an IR team after reaching profitability. Is that something we can expect to see from you guys moving forward and maybe in the second half?

We are really close with Lytham Partners and Adam Lowensteiner. We still really close with them, and we don't -- we haven't been pursuing other IR firms because we have a good relationship with them. And yes, I had some invites to participate at some events, and I'll look into getting out there and putting more out. I am going to talk to I think it was at Alpha Wolf in Las Vegas, and he does that video broadcast. And so I might do a second half of the year. We did a broadcast last year on that, so I might do another one of those. If he will get me back. And I want to get some more stuff out there. We've really -- as I know -- and I know Tom you followed a bit is we've continuously keep our foot on the throttle for marketing and getting information out there on what we're doing with our products and more and more doctors have posted about us than ever before, and we see it in the analytics from Google and LinkedIn and Instagram that we've added nearly 1,000 more people following us just this year alone. So that's -- those are all steps and indicators in the right direction and getting this much of the word out there. I think that's something that we lacked on last year, and we improved on that this year in multiple folds in that aspect.

[Operator Instructions] The next question is from Lindsay Leeds, a Private Investor.

Congratulations on a strong Q2. I had -- let's go back to the SiLO TSX average selling price. You quoted earlier in the call around a little over 7. Do you see continued pressure on that pricing? Or are we reaching a point where we expect that to stabilize?

I think that price is stabilizing. Yes, I think it is stabilizing. That's the question. In -- it was at such a high mark, how sustainable would it have been to stay there. I don't know what the other people are saying as our competitors. But I think that the price is now starting to settle, and we see that settle of that price point because we're very focused on the outpatient surgery center. So it's a good collaboration with us and the members who own those surgery centers that they're running a profitable business, they're getting a great product something that fits well within that a pattern of that surgery center. And so sure, in certain locations, we'll get more. Certainly, government pricing is higher. Even though HCA facilities around the country, which is the largest in the country, even their pricing point is palatable to us because it's such a high volume possibility of it. So yes, to answer your question straight, I think it's settling it at a good price point.

Okay. You talked earlier that ambulatory surgery centers, they helped support your gross margin. Can you elaborate on that a little bit?

In all of our procedures, we're not a big trauma company. So trauma big surgeries or should be a big hospitals. And if you're coming in for your elective SI fusion or your cervical fusion or your low-back lumbar fusion, an outpatient setting might be best for you and more doctors are opening up surgery centers than ever before. I think surgery centers constantly have been growing, growing not in the surgery center business of opening surgery centers, but the stats show me online that more surgery centers are opened up every year across the country. And I just think that, that's the future, especially for elective procedures.

Any chance that you give us kind of a mid-quarter update on where accounts receivable are? Or would you rather not say?

Chad have something to say. Go ahead, if you want to give him an update.

Collections are strong. I don't -- I haven't looked at specific numbers in a couple of days, but I was telling Tom earlier are over [ $90,000 ] way down from last year, like $800,000 or $900,000. So our collections have been strong. In the beginning of Q3 here are the person I hired to collect. He's actually was just in at the tail end of Q2. So most of it his work and good work is going to show up in Q3.

Okay. Awesome. Very happy to hear that.

You and me both. Yes everybody was happy, the board, everybody was very happy with that, yes.

Yes. So I guess, I'm hoping, let's say, reducing the accounts receivable maybe frees up another $500,000 or $1 million as we're driving down the days sales outstanding. With that additional funding sitting on your balance sheet, is there any chance that you can ramp up your sales force growth? Or I guess I'm wondering if we set a goal to double the sales force in the next year, what would be the hardest part? Would it be recruiting? Would it be financing it? Or would it be training? I'd like to understand that.

Well, recruiting -- I think there's -- in finding talented people is always a challenge, but it's also within our wheelhouse. It's not so far out of bounds. We also have contacts with great recruiting resources people that do this for a living. We don't actually -- we have contracts with people, but we're not paying anything on those contracts unless they actually place people for us. Most of this has been word of mouth and people who know each other in the industry. Financing them, obviously, we have a budget that we're running to tighter than ever than we've run in years past, making sure that we're -- our goal is to be profitable and still remains to be that goal. So if it fits the model of the budget, then we add those people in. We offer fair compensation and great upside in sales commissions with the company. So the people who want to join us could make a great living and have a real solid platform to work off of. We're one of the rare interventional companies, especially the size that we are, it's actually a publicly traded company. We offer the full medical benefits and 401(k) and cover expenses and all the things that people who were looking for a sales job are looking for, and we think we offer that. And so we'll be able to fund it as long as it fits within our budget. And if the -- the Board has always said if the sales are there, we'll make it work to get what we need, the resources we need to get to add on to continue to grow. And we're still targeting trying to get to towards $20 million this year as a company. and exceed that. And then where we land this year, we'll certainly set the mark and the budget mark for 2025.

Awesome. So it sounds like maybe we have a shot at $5 million in Q3. It's not a slam dunk, but a window of opportunity.

Yes. It's not a slam dunk, but certainly, what we've already done in the second half of the year has been quite strong. It's directively springed off of. We had to show growth in Q2. That was our goal and we knew it. We said we must show growth. And not only did we show growth, but we also showed balance to make sure that we're -- we had some uptick, but that was because of hiring more sales people, and we're going to continue to hire the right sales people, but then it hit a stride with that. I mean certainly all who are on board with us because we're only departed with one person, and we added a person. So those strides are being hit and certainly reflecting in Q3.

Congratulations on a strong quarter and trajectory here.

Thank you.

This concludes our question and answer. I would like to turn the conference back over to Trent Northcutt for any closing remarks.

Thank you. I lost the link here. Okay. Well, we just wanted to summarize that we're pleased with our performance for the quarter. The strong results reflect our hard work of our team and the commitment of our executive management. We are optimistic about growth prospects and are confident that we'll be able to deliver value to shareholders. And so thank you, everybody.

Thank you, everybody.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.